When people talk about "Profit"; it's actually an enterprise level term. Every business having same category, product may still have different 'profits' though the general industry level profit "margin" may be same or equal.
For example, in Bottled Water in India, the production cost per bottle may be appx Rs 5 per bottle. This becomes 60 per case of 12 bottles. The same case is sold by the business owner at (general trend) Rs. 80 per case.
Revenue 80 * 10000 ( Cases sold per month ) = 8 Lakh
Less Prd cost 60 * 10000 = 6 Lakh
Gross Profit = 8-6 = 2 Lakhs ( 25% ) : 25% is the Margin
But the operating profit is something else. You need to deduct expenses such as :
S& GA ( Sales & Gen Admin Expenses ) , then you will get the Operating Profit, which is called as EBITDA : Earning before Interest, Tax, Depreciation & Ammortisation.
This will vary from business to Business
After this, EBIT will appear, by deducting Depreciation &/ ammortisation.
Still this is NOT the Net Profit. Net profit will come after deducting Interest & Tax from the EBIT.
All of these ( After EBITDA ) don't tell you the operational efficency. The business might be loading unnecessary equipment costs or might be investing in certain non-business assets, on which it might have procured certain loans & paying interest, it might reflect here.
Point is : Never judge a business from its NET profit, look at the EBITDA first.
